Auto Policies

AUTOMOBILE insurance has become a consumer's cause calibre since the 1988 elections when Californians put their votes where their voices were. What they wanted was a rollback in premiums. And, though rates vary from state to state and from company to company, the West Coast drivers inspired a nationwide push for reductions.

Even with lower premiums, careful shopping for insurance is just as important as ever. And you need to know what to look for. The standard policy contains six basic types of coverage: bodily injury, property damage, uninsured motorist, medical payments, collision and comprehensive.

Don't skimp on bodily injury liability and property damage liability coverage. If you or anybody driving your car with your permission is in an accident in which someone is killed or injured, bodily injury liability coverage pays you for an attorney to defend against lawsuits by victims of the accident. It also pays other court costs and any judgments against you. Property damage liability covers property that you do not own. The average driver should carry a policy that would pay up to $ 100,000 for a single injury, and up to $300,000 for all injuries in any one accident. It should also cover up to $50,000 in property damage. If you have substantial assets or a high salary that could be seized in a court to pay off a judgment that exceeds your auto coverage, raise your liability limits to $300,000, $500,000 and $ 100,000. You should also take out an additional umbrella policy. A $1 million umbrella policy costs about $150 to $200 a year in many states.

In some states, you are required to buy uninsured motorist coverage. Buy some even if you don't have to. It pays you for injuries, pain and suffering caused by a hit and run driver or someone who cannot pay a judgment. If you have adequate health and disability insurance where you work, you may not need medical payments coverage. It may largely duplicate protection already supplied by your regular medical policy.

Many are the ways to save on your policy. According to the Insurance Information Institute, you should take as large a deductible as you can afford on collision and comprehensive, which covers fire, theft and vandalism. The deductible is the amount you agree to pay before the insurance kicks in. For instance, increasing the deductible to $500 from the common $200 may reduce your collision premium about 15% to 30%. A $ 1,000 deductible can save you as much as 40%. If your car is more than five years old or its value is under $1,500, consider dropping collision and comprehensive coverage altogether. It never pays more for repairs than your car is worth.

You can reduce your premium further through discounts. For example, companies may give you a discount if you have a good driving record or 5% to 20% off the comprehensive premium cost if your car has antitheft devices. Driver training could cut as much as 20% off your premium. And people aged 50 and over often can get discounts of 10% to 20%.

Once you understand your options, start canvassing companies for price quotes. To get a benchmark price, call State Farm. It's the nation's largest auto insurer and, in many areas, one of the least expensive. You also will want to learn about a company's reputation for service. To do that, check with your state's insurance department. The larger states, including Illinois, New York and California publish annual lists of companies with the highest and lowest percentage of consumer complaints. As you survey the insurance companies, be sure to learn which are most forgiving if you have an accident. For example, if you are at fault for an accident that results in a payment of more than $400, then the Nationwide Insurance Company usually will raise your rates 30%. State Farm generally increases its premium 10% after the first $400 property damage claim. However, these companies, and others as well, will also reward you for accident free years.

There are often significant differences in collision and comprehensive premiums for various car makes and models. So be sure to check this out when you buy a new car. Allstate, for instance, offers 10% to 50% discounts in most states on comprehensive and collision policies for cars that are least likely to be stolen usually full sized sedans and mini vans and that are harder to damage and easier to repair. Many states have drafted insurance companies into the war against auto theft. If you live in one of those states and you have installed special alarms or other antitheft devices, you can arrange for your premiums to be reduced. There are many other steps that drivers everywhere can take to improve their insurance against auto theft.

If you rent a car while waiting for the insurance settlement, you will probably have to bear some of that expense, too. Most policies pay about $15 a day toward a rental car. Renting is likely to cost you two or three times that much per day and you probably will not get a settlement within a month. Thus, it is wise to buy a little known rider, which at State Farm costs typically $8 a year and extends your period of coverage. The rider also pays up to $400 for meals, lodging and transportation while you are waiting for your own car and covers a substantial share of your policy's deductible if you have an accident driving the rental car.

Your insurance coverage for the theft of accessories or possessions you have in the car may not be as extensive as you expect. Some insurance companies that classify removable radios as a portable accessory do not cover their theft.

Neither your auto policy nor any extra coverage applies to other things that a thief might steal from your car, such as a $ 1,000 set of golf clubs or a $400 designer blazer. But you are probably covered anyway. Most homeowner’s policies apply to anything taken by someone who breaks into your car. There is a hitch, though: you have to prove that the doors were locked at the time of the theft.

Whatever kind of insurance you are buying, you can save money and worry by remembering this: Never risk more than you can afford to lose. But don't pay to insure what you can afford to risk.